Weekly property evaluation – 10pc decline in international possession of ag land, ATO finds

International held agricultural land by state or territory – internet change in comparison with prior yr

THIS week’s property evaluation scrutinises the newest findings from the Australian Taxation Workplace’s annual International Possession of Land register for the yr to June, 2022.

The annual report is designed to offer higher transparency concerning the stage of abroad funding in Australia’s farmland.

In keeping with the newest report, Australia has greater than 387 million hectares of agricultural land – and of that, 12.3 p.c, or round 48 million hectares, has some stage of foreign-ownership. The definition of ‘international owned’ contains entities with a stage of international possession of not less than 20pc, so the agricultural land register captures particulars of entities even when the vast majority of shareholders are Australian (see feedback beneath).

Final yr recorded a ten p.c drop in land space held by international pursuits on the earlier yr’s figures, with the ATO citing growth by Australian buyers for the decline.

Throughout 2021 to 2022, an easing of drought situations and improved seasonal situations lifted the variety of hectares used for agriculture, significantly throughout the japanese states – contributing to the international owned land decline in share phrases.

High 10 international proudly owning ag land international locations

Largest international house owners

For the fourth consecutive yr, China stays the biggest international proprietor of Australian agricultural land, by land space (see desk above).

China holds a 2pc share or 7.786 million ha (750,000ha freehold and simply over 7 million ha leasehold) after divesting 713,000ha final yr.

The UK is shut behind with 1.9pc or 7.295m ha (781,000ha freehold and 6.514m ha leasehold) after promoting off 956,000ha throughout the identical interval.

The overwhelming majority of nation owned by each China and the UK is leasehold.

Actually, 82pc (41.55m ha) of all Australian agricultural leasehold land held by foreigners is leasehold – down 8pc on the earlier yr.

Rating beneath China and the UK, six different abroad international locations maintain greater than 2 million hectares of Australian ag land (mixed freehold and leasehold), together with Canada (2.886m ha), the Netherlands (2.403m ha), the USA (2.256m ha), the tax haven of The Bahamas (2.2m ha), Germany (2.134m) and Switzerland (2.113m).

Relating to the nation with the biggest share of Australian agricultural land on a freehold foundation, the Netherlands tops the checklist with 1.453m ha adopted by the US with 1.156m ha.

International-held pursuits in freehold and leasehold land by state/territory

Rural property numbers

In different statistics from the ATO’s newest annual report, the variety of rural properties secured by foreigners has been steadily rising over the previous three years – from 9897 in 2020 to 10,284 in 2021 and 10,313 in 2022.

Foreigners personal extra properties in NSW/ACT than every other state or territory (2449), adopted by Victoria (2218), Queensland (1711), Western Australia (1639), South Australia (1037), Tasmania (1151) and the Northern Territory (108).

International held ag land by variety of properties

Land use

By way of land use, grazing dominated foreign-owned ag land use at greater than 41 million ha, adopted by cropping (2.085m ha), unreported (2.056m) and  forestry (1.464m).

International-owned land used for livestock is down 9.2pc on the earlier yr.

International house owners within the NT and Queensland are every working greater than 13m ha for livestock, adopted by WA (9.29m ha), SA (2.922m ha), NSW/ACT (1.549m ha), Victoria (68,000ha) and Tasmania (59,000ha).

International held ag land by land use

Land space by state/territory

The NT was the one state or territory to document an increase by way of land space held by international pursuits – up 2pc to 14.533m ha, or 27.4pc of all NT ag land.

Main declines in double-digit share phrases was South Australia with a 36pc drop in foreign-owned land final yr to three.162m ha, adopted by a 23pc drop in WA (11.092m ha) and Tasmania, down 10pc in space to 360,000ha.

Smaller falls had been recorded in Victoria (-4.2pc to 641,000ha), adopted by NSW/ACT down 3.6pc to 2.577m ha and Queensland down 2pc to fifteen,345m ha.

Put extra merely on a share foundation, greater than 1 / 4 (27.4pc) of agricultural land within the Northern Territory is partly/wholly international owned, adopted by Tasmania (23.9pc), WA (12.8pc), Queensland (11.4pc), South Australia (6.8pc), Victoria (5.6pc) and NSW/ACT (4.8pc).

Joint ventures distort statistics

Elders Agribusiness Investments basic supervisor Mark Barber stated it was necessary to look past the headlines of the newest International Possession findings and scrutinise the element.

“It’s deceptive to say that foreigners personal 12pc or 48m ha of Australian ag land,” he stated.

Mark Barber

“A good portion is pastoral leasehold which is giant in land dimension, however small by way of output.”

Of the 48m ha of Australian agricultural land that’s international owned, 36m ha is wholly owned by foreigners and the remaining 11m ha is shared beneath joint ventures and partnerships with Australians.

Mr Barber stated this co-investment is usually missed, with international funding backing some high-performing Australian operations.

“International capital desires publicity to agricultural land, and particularly agricultural land in Australia. It recognises our agricultural output and high quality of administration, and consequently, is looking for partnerships,” he stated.

One of the vital apparent examples is Canada’s Public Sector Pension Funding Board which invests alongside many Australian corporations.

These agriculture partnerships embrace Hewitt Cattle Australia, Australian Meals & Fibre (AFF), Aurora Dairies, BFB (Brabin, Firman and Block), Dawn Cropping and Contemporary Nation Farms.

These seven partnerships are described by PSP as “best-in-class farmers overlaying practically each main Australian agricultural commodity and working throughout each state, together with giant components of regional and distant Australia.”

Mr Barber stated international funding added worth to companies whether or not they be wholly or partly Australian owned.

“International buyers create liquidity at scale within the home market,” he stated.

“As an example, in 2021, Canadian actual property funding firm AIMCo and world funding supervisor New Forests paid near $600m for Macquarie’s Lawson Grains, spanning 90,500ha of farming nation throughout ten aggregations in NSW and Western Australia.”

Mr Barber cited liquidity as a method to encourage home superannuation funds to put money into Australia.

“They require giant transactions and likewise want different giant buyers (home or worldwide) to create liquidity at that finish of the market.”

“These looking for to go away a fund or an funding can both look forward to it to picked off in items by Australian farming households (home market) or exit in a single hit with a big counter-party.”

He stated international buyers performed a critically necessary function in creating liquidity within the large-scale agricultural funding market in Australia.

“Australian home funds might not take part to the identical extent as the larger offshore funds, nonetheless they might be far much less prone to make investments if these massive funds weren’t working in Australia.”

“These abroad funds are creating the marketplace for bigger scale investments, the demand for skilled administration groups, and/or the related providers that go together with them,” Mr Barber stated.

Additional studying:

Why are Australian institutional buyers shy of the ag sector?

Will 2023-24 be the yr of the institutional buyers?